There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Richmont Mines Inc. (USA) (NYSEMKT:RIC).
Richmont Mines Inc. (USA) (NYSEMKT:RIC) was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. Richmont Mines Inc. (USA) (NYSEMKT:RIC) has seen a decrease in hedge fund sentiment recently. There were 5 hedge funds in our database with Richmont Mines Inc. (USA) (NYSEMKT:RIC) positions at the end of the previous quarter. At the end of this article, we will also compare Richmont Mines Inc. (USA) (NYSEMKT:RIC) to other stocks, including Biotie Therapies Oyj (ADR) (NASDAQ:BITI), New York & Company, Inc. (NYSE:NWY), and Westport Innovations Inc. (USA) (NASDAQ:WPRT) to get a better sense of its popularity.
Follow Richmont Mines Inc (NYSEMKT:RIC)
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In today’s marketplace, there are tons of signals investors put to use to assess publicly traded companies. Some of the best signals are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite fund managers can beat the S&P 500 by a very impressive margin (see the details here).
Keeping this in mind, let’s check out the latest action regarding Richmont Mines Inc. (USA) (NYSEMKT:RIC).
How are hedge funds trading Richmont Mines Inc. (USA) (NYSEMKT:RIC)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decrease of 20% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the most valuable position in Richmont Mines Inc. (USA) (NYSEMKT:RIC). Renaissance Technologies has a $8.7 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $41,000 position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Ken Griffin’s Citadel Investment Group, and Chuck Royce’s Royce & Associates.
We view hedge fund selling in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because none of the 700+ hedge funds tracked by Insider Monkey identified Richmont Mines Inc. (USA) (NYSEMKT:RIC) as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Richmont Mines Inc. (USA) (NYSEMKT:RIC) but similarly valued. We will take a look at Biotie Therapies Oyj (ADR) (NASDAQ:BITI), New York & Company, Inc. (NYSE:NWY), Westport Innovations Inc. (USA) (NASDAQ:WPRT), and Simulations Plus, Inc. (NASDAQ:SLP). This group of stocks’ market valuations matches Richmont Mines Inc. (USA) (NYSEMKT:RIC)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BITI | 6 | 26594 | -2 |
| NWY | 14 | 22630 | -1 |
| WPRT | 7 | 2875 | 1 |
| SLP | 4 | 6513 | 1 |
As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $9 million in Richmont Mines Inc. (USA) (NYSEMKT:RIC)’s case. New York & Company, Inc. (NYSE:NWY) is the most popular stock in this table. On the other hand, Simulations Plus, Inc. (NASDAQ:SLP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, Richmont Mines Inc. (USA) (NYSEMKT:RIC) is even less popular than Simulations Plus, Inc. (NASDAQ:SLP). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
